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Specialization in Bank Lending: Evidence from Exporting Firms

Daniel  Paravisini,  Veronica  Rappoport,  Philipp  Schnabl,  July 2017
Paper No' CEPDP1492: | Full paper (pdf)
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Keywords: banking, export finance, specialization

JEL Classification: F14; F34; G21

Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CEP Discussion Papers
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Abstract:

We develop an empirical approach for identifying specialization in bank lending using granular data on borrower activities. We illustrate the approach by characterizing bank specialization by export market, combining bank, loan, and export data for all firms in Peru. We find that all banks specialize in at least one export market, that specialization affects a firm’s choice of new lenders and how to finance exports, and that credit supply shocks disproportionately affect a firm’s exports to markets where the lender specializes in. Thus, bank market-specific specialization makes credit difficult to substitute, with consequences for competition in credit markets and the transmission of credit shocks to the economy.